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Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
Senior Editor

Bill Steinman
Senior Editor

Richard L. Cassin
Editor at Large

Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
Contributing Editor

Marc Alain Bohn
Contributing Editor

Bill Waite
Contributing Editor

Shruti J. Shah
Contributing Editor

Russell A. Stamets
Contributing Editor

Richard Bistrong
Contributing Editor

Eric Carlson
Contributing Editor

How nuanced are your risk rankings for countries?

Several well-known lists rank colleges and universities in the United States. Rankings that take into account diverse factors — class size, teacher-to-student ratio, financial aid, campus social life — are useful as a relative assessment of quality and allow future students to evaluate which schools might be good matches for their own temperaments, needs, resources, and goals.

Assessments of country-level bribery risk should be no less nuanced. Just as a student shouldn’t apply to a school-based solely on its academic ranking, compliance-minded multinational companies ought to consider more about a potential market than whether it is considered high- or low-risk.

When evaluating governmental corruption compliance teams should instead aim to understand the nature and location of that corruption and consider a range of contributing factors.

For example, we know that bribery risk often arises from severe bureaucratic inefficiency, allowing corrupt civil servants to leverage their practical discretion over the facilitation of governmental services. Knowing how much delay and red tape to expect can help compliance teams prepare employees and agents to confidently resist bribe demands in exchange for preferential treatment. Imagine further that a government makes a successful long-term effort to reduce such inefficiencies. Should this be interpreted as reducing the leverage-based risk? Perhaps, but it could also be useful to evaluate whether an improved anti-corruption enforcement environment accompanies those administrative reforms or whether there is a demonstrable change in government officials’ expectations of bribery.

Your company’s status and goals also play a role in risk assessment. Looking at TRACE’s 2020 Bribery Risk Matrix, which was released in November, it may be pertinent to ask: Is your company a household name in a given market? Does that present you with opportunities to influence a government’s tolerance of graft? Can you find support in a vibrant civil society and a thriving free press? How might you encourage and normalize a greater degree of transparency in government transactions? What if you are less closely involved in a country’s affairs but simply want to get your goods through customs without a payoff? Is the bureaucratic culture becoming less corrupt, or should you consider geographically rerouting?

Higher education isn’t just about exchanging time and money for knowledge, skills, and status. Attending college involves participating in a community of learning, achieving growth that goes beyond any particular accreditation.

Similarly, understanding bribery risk means understanding not only the pitfalls of a particular market but also the political ecosystem in which your company operates. While your business-oriented divisions—like some parents—may be solely interested in the bottom line, compliance teams have a responsibility and an opportunity to consider the uncommodified aspects of business engagement and how your company’s endeavors can be not just profitable but enriching.

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  1. You raise some great points, Robert! Particularly around how your risks by country may be very granular depending on your commercial model, touchpoints in that market with regulatory authorities, etc. Enriching this type of country-level assessment with actual insights from your enterprise data can take your risk assessment even further. For example, layering on data analytics on your spend, investigations findings related to a market, and third party diligence data can reveal risks in countries that appear to be low-risk according to CPI score or other generic factors and provide you with a much more accurate view of the actual corruption risks facing your organization.

  2. Robert, you are absolutely right !!!

    There is a general overreliance on CPI and lack of granularity in most of risk assessment/mapping exercises.

    Let me quote the OECD FOREIGN BRIBERY REPORT published in 2014:

    “among the 427 cases in this
    report, the majority of bribes paid abroad were not
    paid to public officials from developing countries.
    In fact, almost one in two cases involved bribery of
    foreign public officials from countries with high to
    very-high levels of human development, based on
    the UN Human Development Index (HDI) of the
    country where the bribery took place, at the time it took place”.

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